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What is Replacement GAP Insurance and who can buy it?

GAP insurance policies don't come much better than this.

If your vehicle is declared a Total Loss (written off) within the policy term, Replacement GAP insurance aims to pay the difference between your Motor Insurance payout and THE GREATER of either:

1. The amount outstanding on finance at the time of claim, OR
2. The original invoice price that you bought the vehicle for, OR
3. The cost of replacing your vehicle at the time of claim with one of the same Make, Model, Specification, Age and Mileage (or nearest equivalent) as your original vehicle was at the time that you first bought it - even if the replacement vehicle cost is MORE than you bought the vehicle for first time around.

Brand New Vehicle?

Where the original vehicle was brand new and the amount of outstanding finance at the time of claim is not more than the replacement vehicle price, Replacement GAP Insurance pays the difference between your Motor Insurance payout and the cost of replacing the vehicle New-For-Old at the time of claim - even if the new vehicle costs more than you paid for your original vehicle!

Used Vehicle?

Where the original vehicle was a used vehicle and the amount of outstanding finance at the time of claim is not more than the Replacement vehicle price, replacement GAP Insurance pays the difference between your Motor Insurance payout and the cost of replacing the vehicle at the time of claim with one of the same Make, Model, Specification, Age and Mileage as (or the nearest equivalent to) your original vehicle at the time you first bought it - even if the Replacement Vehicle costs more than you paid for your original vehicle

Invoice Price Protection

In either case (new or used vehicle) if the Replacement Vehicle at the time of claim is available on sale for LESS than you bought the original vehicle for, the policy will revert to an Invoice GAP Insurance cover-level ensuring that unlike some other Replacement GAP insurance policies available elsewhere that would only pay out to the then lower cost of the Replacement Vehicle at the time of claim, with our policy you'll always get back at least what you paid for the vehicle.

Eligibility

It's available for vehicles that (at the time of purchasing the policy) are less than 10 yrs old, that were bought within the last 365 days (1-year) from either a VAT registered UK Motor Dealer or a private seller, for a purchase price of up to £150,000.

Claim Limits

Claim Limit options range from £5,000 to £Unlimited (please note that the maximum claim limit for vehicles bought for between £100k and £150k is £100k) and durations from 1 to 5 years are available with the option to defer the start date of by up to 12 months from the date the vehicle was first registered if you have New for Old cover during the first year of your Motor Insurance policy.

For guidance on what Claim Limit might be appropriate for you, please click here.

How does Replacement Gap Insurance work?

In the event of your vehicle being declared a Total Loss (aka "written off") as a result of an accident, fire or theft, your comprehensive Motor Insurance policy would normally only pay out the market value of the vehicle at the time of loss.

Now, imagine that you'd bought the vehicle brand new, two years ago for £20k, it's now been written off and your Motor Insurer is only prepared to pay out £10k. This would leave you £10k short of being able to buy the same (or nearest equivalent) vehicle, brand new today. But not only that, imagine that the brand new vehicle today is on sale for £2k more than you originally bought your vehicle for.

In this scenario you'd have a "gap" of £12k - this being the difference between your motor insurance payout and the £22k cost of replacing the vehicle new-for-old today. Replacement GAP Insurance would aim to pay this £12K.

However, Replacement GAP insurance can be bought for a vehicle up to 5 years old. If you'd bought Replacement GAP insurance to cover a used vehicle and that vehicle was declared a Total Loss within the policy term, Replacement GAP insurance would pay the difference between your Motor Insurance payout and the cost of replacing the vehicle at the time of claim with one of the same Make, Model, Age, Mileage and Specification as (or the nearest equivalent to) the original vehicle when you first bought it.

In either case (new or used vehicle) if the Replacement Vehicle at the time of claim is available on sale for LESS than you bought the original vehicle for, the policy will revert to an Invoice GAP Insurance cover-level ensuring that unlike some other Replacement GAP insurance policies available elsewhere that would only pay out to the then lower cost of the Replacement Vehicle at the time of claim, with our policy you'll always get back at least what you paid for the vehicle.

How Replacement Gap Insurance Works
Key Features of Replacement Gap Insurance
  • DOES NOT exclude costs such as Warranties, Registration Fees, Insurance Premiums, Road Fund Licence or fuel & paintwork protection applications*.
  • NO right to reduce the GAP Insurance payout if your Motor Insurance policy pays out less than the Market Value of your vehicle at the time of loss.*
  • Available for Cars and Light Vans, up to 5 years old, purchased within the last 365 days from an authorised dealer or finance house.
  • CASH payout to you rather than to a nominated dealer, leaving you free to choose the provider of your replacement vehicle***
  • Ability to cancel the policy at any time and receive a pro-rata refund of unused premium with NO CANCELLATION FEE!
  • FREE option to defer the start date of the policy by up to 12 months from the date the vehicle was first registered.****
  • Underwritten by UK General Insurance Limited, on behalf of Great Lakes Insurance SE.
  • NO right to revalue the purchase price of your vehicle at the time you bought it.*
  • Pays £250 towards the excess on your Comprehensive Motor Insurance policy.
  • FREE transfer of any unused premium on to a replacement vehicle.
  • Policy durations of up to 5 years available.
  • Claim Limits of up to £100,000 available.
  • FREE policy amendments.

 

* Applicable only to policies purchased after March 28th 2013.
*** If there is finance secured on the vehicle, the finance company may insist that our payout is made to them directly, with you then being paid any balance that remains.
***** NOT available for Leased (Contract Hire) vehicles.

What Claim Limit Do I Need?

The most frequently asked question... The honest answer, is that it very much depends how much your vehicle is going to depreciate by over the duration of the Replacement Gap Insurance policy.

Guess!

Considering that nobody knows for sure how much your vehicle is going to depreciate, it's a little bit of guess work. A common perception is that the average vehicle will depreciate by between 40% and 70% over a three year period; and indeed lots do - it's not a bad starting point for selecting a Claim Limit.

The issue with this perception though, is that it's never a steady rate of depreciation. Vehicles depreciate faster (a greater %'age) in their earlier years (in terms of the age of the vehicle) than they do in their later years. So, whilst your vehicle might well only depreciate by say 50% over a 3 year duration, it could well be that perhaps 30% (or more) of that, was in the first year alone!

When choosing a Claim Limit for any Gap Insurance policy, you have to try to predict the potential depreciation over the entire duration of the policy. If, for example, for a £15,000 vehicle you chose a 3 year policy with a Claim Limit of £5,000 (33%), this may well be sufficient for the first year, but with the potential for the vehicle to depreciate by up to 50%, 70% or even more, a £5,000 Claim Limit would likely be woefully inadequate as you approach the end of the policy.

The Replacement Gap Insurance Difference.

Let's not forget too that Replacement Gap Insurance needs to factor in the potential for the replacement cost of the new vehicle being more expensive than the original purchase price paid. This could be for a number of reasons such as the same level of discount that you originally enjoyed no longer being available or just that the Manufacturer has increased the price of the equivalent vehicle full stop!

The point, is that when choosing a claim limit for a Replacement Gap Insurance policy you need to be considering both ends of the scale. Firstly, by how much will your vehicle depreciate over the lifetime of your Replacement Gap Insurance policy. Secondly, by how much (if any) will the cost of replacing your vehicle with a new equivalent increase over the same period.

Still guessing?

But this is all still guess work. We want to flip it on it's head a little. Read on...

10 Of Our Replacement Gap Insurance Claims - What claim limit would you have chosen?

What we're showing you below are details of actual claims that have paid out on our policies, along with the vehicle details including the original purchase price and the length of ownership.

From this, we can calculate the rate of depreciation as a cash value per month and also reflect the total depreciation over the same duration as a percentage of the original purchase price.

You might be surprised at how well (little depreciation) some vehicles performed and how bad (considerable depreciation) others did.

It makes for some very interesting reading, but that aside, whilst it doesn't entirely remove the element of guess work for you, we're confident that being able to see the vehicle types, values and durations of ownership alongside the payout/depreciation figures, will surely be of great help in you choosing a claim limit that you feel most comfortable with.

  • Ford Ka
  • Gap Insurance Example: Ford Ka. Purchased: August 2015. Owned For 20 Months. Depreciated by 49.14% of Invoice Price. Gap Insurance paid out: £4,895.00
  • Vehicle Purchased
  • Invoice Price
  • Gap Insurance Claim
  • Gap Insurance paid out
  • August 2015
  • £9,962.00
  • April 2017
  • £4,895.00
  • Length of ownership
  • 20 Months
  • Rate Of Depreciation (£ p/m)*
  • An average of £244.75 Per Month
  • Total Depreciation (%'age)*
  • This vehicle depreciated by 49.14% of its original Invoice Price during the 20 months it was owned.
  • Policy Cost Vs Payout (%'age)
  • At £108.92 the cost of the policy represents 2.23% of the amount paid out.
  • Vauxhall Corsa
  • Gap Insurance Example: Vauxhall Corsa. Purchased: September 2015. Owned For 19 Months. Depreciated by 41.85% of Invoice Price. Gap Insurance paid out: £5,021.84
  • Vehicle Purchased
  • Invoice Price
  • Gap Insurance Claim
  • Gap Insurance paid out
  • September 2015
  • £12,000.00
  • April 2017
  • £5,021.84
  • Length of ownership
  • 19 Months
  • Rate Of Depreciation (£ p/m)*
  • An average of £264.31 Per Month
  • Total Depreciation (%'age)*
  • This vehicle depreciated by 41.85% of its original Invoice Price during the 19 months it was owned.
  • Policy Cost Vs Payout (%'age)
  • At £103.27 the cost of the policy represents 2.06% of the amount paid out.
  • BMW 3 Series
  • Gap Insurance Example: BMW 3 Series. Purchased: July 2015. Owned For 21 Months. Depreciated by 22.42% of Invoice Price. Gap Insurance paid out: £5,890.00
  • Vehicle Purchased
  • Invoice Price
  • Gap Insurance Claim
  • Gap Insurance paid out
  • July 2015
  • £26,270.00
  • April 2017
  • £5,890.00
  • Length of ownership
  • 21 Months
  • Rate Of Depreciation (£ p/m)*
  • An average of £280.48 Per Month
  • Total Depreciation (%'age)*
  • This vehicle depreciated by 22.42% of its original Invoice Price during the 21 months it was owned.
  • Policy Cost Vs Payout (%'age)
  • At £205.03 the cost of the policy represents 3.48% of the amount paid out.
  • Land Rover Discovery
  • Gap Insurance Example: Land Rover Discovery. Purchased: September 2015. Owned For 18 Months. Depreciated by 43.14% of Invoice Price. Gap Insurance paid out: £17,315.00
  • Vehicle Purchased
  • Invoice Price
  • Gap Insurance Claim
  • Gap Insurance paid out
  • September 2015
  • £40,140.00
  • March 2017
  • £17,315.00
  • Length of ownership
  • 18 Months
  • Rate Of Depreciation (£ p/m)*
  • An average of £961.94 Per Month
  • Total Depreciation (%'age)*
  • This vehicle depreciated by 43.14% of its original Invoice Price during the 18 months it was owned.
  • Policy Cost Vs Payout (%'age)
  • At £193.88 the cost of the policy represents 1.12% of the amount paid out.
  • BMW 2 SERIES
  • Gap Insurance Example: BMW 2 SERIES. Purchased: December 2015. Owned For 15 Months. Depreciated by 31.59% of Invoice Price. Gap Insurance paid out: £8,845.00
  • Vehicle Purchased
  • Invoice Price
  • Gap Insurance Claim
  • Gap Insurance paid out
  • December 2015
  • £28,000.00
  • March 2017
  • £8,845.00
  • Length of ownership
  • 15 Months
  • Rate Of Depreciation (£ p/m)*
  • An average of £589.67 Per Month
  • Total Depreciation (%'age)*
  • This vehicle depreciated by 31.59% of its original Invoice Price during the 15 months it was owned.
  • Policy Cost Vs Payout (%'age)
  • At £174.21 the cost of the policy represents 1.97% of the amount paid out.
  • Audi S3
  • Gap Insurance Example: Audi S3. Purchased: December 2015. Owned For 15 Months. Depreciated by 27.90% of Invoice Price. Gap Insurance paid out: £9,290.00
  • Vehicle Purchased
  • Invoice Price
  • Gap Insurance Claim
  • Gap Insurance paid out
  • December 2015
  • £33,300.00
  • March 2017
  • £9,290.00
  • Length of ownership
  • 15 Months
  • Rate Of Depreciation (£ p/m)*
  • An average of £619.33 Per Month
  • Total Depreciation (%'age)*
  • This vehicle depreciated by 27.90% of its original Invoice Price during the 15 months it was owned.
  • Policy Cost Vs Payout (%'age)
  • At £173.36 the cost of the policy represents 1.87% of the amount paid out.
  • BMW X5
  • Gap Insurance Example: BMW X5. Purchased: June 2016. Owned For 8 Months. Depreciated by 37.87% of Invoice Price. Gap Insurance paid out: £10,525.00
  • Vehicle Purchased
  • Invoice Price
  • Gap Insurance Claim
  • Gap Insurance paid out
  • June 2016
  • £27,789.00
  • February 2017
  • £10,525.00
  • Length of ownership
  • 8 Months
  • Rate Of Depreciation (£ p/m)*
  • An average of £1,315.63 Per Month
  • Total Depreciation (%'age)*
  • This vehicle depreciated by 37.87% of its original Invoice Price during the 8 months it was owned.
  • Policy Cost Vs Payout (%'age)
  • At £286.12 the cost of the policy represents 2.72% of the amount paid out.
  • Ford Fiesta
  • Gap Insurance Example: Ford Fiesta. Purchased: September 2015. Owned For 17 Months. Depreciated by 18.56% of Invoice Price. Gap Insurance paid out: £2,088.00
  • Vehicle Purchased
  • Invoice Price
  • Gap Insurance Claim
  • Gap Insurance paid out
  • September 2015
  • £11,250.00
  • February 2017
  • £2,088.00
  • Length of ownership
  • 17 Months
  • Rate Of Depreciation (£ p/m)*
  • An average of £122.82 Per Month
  • Total Depreciation (%'age)*
  • This vehicle depreciated by 18.56% of its original Invoice Price during the 17 months it was owned.
  • Policy Cost Vs Payout (%'age)
  • At £227.50 the cost of the policy represents 10.90% of the amount paid out.
  • Toyota Hi Lux
  • Gap Insurance Example: Toyota Hi Lux. Purchased: February 2011. Owned For 71 Months. Depreciated by 79.03% of Invoice Price. Gap Insurance paid out: £19,430.00
  • Vehicle Purchased
  • Invoice Price
  • Gap Insurance Claim
  • Gap Insurance paid out
  • February 2011
  • £24,585.00
  • January 2017
  • £19,430.00
  • Length of ownership
  • 71 Months
  • Rate Of Depreciation (£ p/m)*
  • An average of £273.66 Per Month
  • Total Depreciation (%'age)*
  • This vehicle depreciated by 79.03% of its original Invoice Price during the 71 months it was owned.
  • Policy Cost Vs Payout (%'age)
  • At £103.14 the cost of the policy represents 0.53% of the amount paid out.
  • Hyundai i30
  • Gap Insurance Example: Hyundai i30. Purchased: April 2015. Owned For 21 Months. Depreciated by 24.27% of Invoice Price. Gap Insurance paid out: £2,666.99
  • Vehicle Purchased
  • Invoice Price
  • Gap Insurance Claim
  • Gap Insurance paid out
  • April 2015
  • £10,988.00
  • January 2017
  • £2,666.99
  • Length of ownership
  • 21 Months
  • Rate Of Depreciation (£ p/m)*
  • An average of £127.00 Per Month
  • Total Depreciation (%'age)*
  • This vehicle depreciated by 24.27% of its original Invoice Price during the 21 months it was owned.
  • Policy Cost Vs Payout (%'age)
  • At £76.81 the cost of the policy represents 2.88% of the amount paid out.

* - The Replacement Gap Insurance rates of depreciation figures shown above reflect not only the depreciation of the original vehicle, but also the potential for the cost of the replacement vehicle to have been greater than the original purchase price paid.